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Mortgage-Related Unfair Practices

Buyers used to have to make a 20% down payment on a home for banks and other lenders to feel secure in giving them a mortgage. Lenders preferred to risk only 75%-80% of the value of a property and to want buyers to risk significant equity as well. However, as home prices have gone up, lenders have devised another solution—private mortgage insurance, or PMI. However, the complaint for this class action alleges that Bank of America, NA has taken advantage of PMI and refused to stop billing borrowers even when the PMI is no longer needed.

RoundPoint Mortgage Servicing Corporation has agreed to refund money to borrowers to settle a class action about lender-placed insurance (LPI, also known as force-placed insurance). Mortgage lenders require that homeowners have an LPI policy when the homeowners’ insurance lapses or when the homeowners’ policy is not considered acceptable to the lender.

Wells Fargo has seen a number of scandals, including its employees opening fake accounts for real customers and its force-placing of unnecessary auto insurance on car loan borrowers. Now, the complaint for this class action alleges that the bank wrongfully refused certain customers home loan modifications under the Home Affordable Modification Program (HAMP).

Wells Fargo is settling yet another class action with a $30 million payout. The complaint alleged that Wells Fargo violated the terms of the promissory notes underlying certain FHA-insured home loans when it collected post-payment interest without providing proper disclosure to borrowers who made prepayment inquiries, requested pay-off figures, or tendered prepayment.

If you’re a homeowner, chances are you’re required to pay certain yearly expenses, like your property taxes or your homeowner’s insurance, to your mortgage lender. You pay a little every month, and then once a year the lender pays the tax office or insurance company on your behalf. In eleven states, lenders are required to pay interest to borrowers on the amounts stored in the escrow accounts during the year. However, it seems that not all lenders are doing this.

The complaint for this lawsuit has been written by two non-lawyers, asserting claims in connection with foreclosures, mortgage-backed securities (MBSs), and allegedly forged documents. Its essential charge is that the parties who foreclosed on the plaintiffs’ home had no right to do so, because they did not complete the proper documentation at the required time and/or cannot show proper documentation of ownership now. It alleges wrongful sale of the property and fraud, among other things.

Nationstar Mortgage, LLC has agreed to a settlement in a class action that alleges it violated the Fair Debt Collection Practices Act and Washington State Collection Agency Act. The complaint alleged that Nationstar charged borrowers an extra convenience fee to pay their mortgages over the phone when no such charges were authorized by their loan agreements.

Plaintiff Stacy Chittick had made all of her mortgage payments on time, including amounts intended for her escrow account. But the complaint for this class action claims her mortgage servicer did not pay the taxes due from her escrow account on time, costing her penalties and other difficulties.

Many people who hold mortgages are required by the mortgage companies to pay monthly amounts into an escrow or impound account. California law requires that the interest on these accounts be paid to the homeowner. However, the complaint for this class action alleges that Flagstar Bank, FSB or its parent Flagstar Bancorp, Inc., did not do this.